Quick to quash the reports was Xbox Live's Director of Programming, Larry Hryb, aka Major Nelson, who wrote on his blog:

"Clarification time! The console replacement plan that is the subject of some of today’s headlines is related to a previous update, NOT the system update that has been in public beta and will be deployed shortly.

"The new disc format that is part of the beta has been rigorously tested across all Xbox 360 models and there are no known compatibility issues."

The latest update - which ushers in added piracy protection and support for XGD3 - rolls out from today. ®